A former District government insider analyzes the hospital’s troubles.

Photographs by Darrow Montgomery

So the board of directors of the Public Benefit Corp. (PBC) has placed John Fairman, chief executive of D.C. General Hospital, on administrative leave for a month, pending a further decision about his future. Now comes the hard part.

Over the last few months, a stream of scathing reports and audits has blasted the leadership of the quasi-independent PBC, which manages D.C. General. Nonfunctioning information systems, nonexistent financial records, and managers whose major qualification is a link to some member of the D.C. Council have all been featured in the reports—not to mention a $90 million unbudgeted deficit racked up over the last three years.

These are all legitimate issues that should be investigated. But they miss the more basic point, which is that Fairman, with the tacit support of much of the city’s establishment, has been leading D.C. General in the wrong direction.

The District has the highest infant mortality rate of any large American city, the third-highest AIDS rate, and the seventh-highest cancer rate. Yet instead of investing heavily in primary and preventive care, we spend most of the money allocated to helping the uninsured on propping up an inefficient old hospital that most of the uninsured do not use.

In other words, Fairman has been fighting the wrong battle. At a time when the District’s policymakers badly need an honest discussion of the options they face with respect to a public health-care system, Fairman has dissembled in an effort to distract attention from the fact that D.C. General, in its present form, cannot survive.

What qualifies me to make these statements? For four years, from August 1995 until October 1999, when I left to join the faculty of Georgetown University, I was the director of the D.C. Medicaid program, the District’s $1 billion program of health services for the indigent. So I had a close-up view of the workings of D.C. General.

The key to understanding Fairman is recognizing his different roles. As a health-care manager, he has fared poorly—D.C. General is in much worse shape today than it was five years ago, when he took over. As a politician, though, he’s been masterful, nurturing a grass-roots network of supporters throughout the city, playing skillfully to the whims and biases of councilmembers, and making maximum use of the clout that comes from having 2,000 employees (a significant voting bloc) and a budget of $150 million. Over the years, he’s won most of his political battles, even if the health-care system that he has managed is now coming apart at the seams.

When I first met Fairman, in late 1995, he told me that Medicaid owed D.C. General $70 million to $80 million for old unpaid hospital bills dating back to the early ’80s. I responded that we would make every effort to accommodate him—after all, 50 cents of every Medicaid dollar comes from the federal government, and it is in the District’s interest to bring in as many federal dollars as possible—but that we would need documentation to support the validity of his claims. Fairman, however, wanted me to waive the documentation rules.

Once he realized I wouldn’t do so, he tried to persuade city officials to overrule me. When that didn’t work, he started a campaign to have me fired. In 1998, he got mayoral candidate Kevin Chavous to call for my removal from office because of all the money I had denied the hospital. At the time, Chavous was running against now-Mayor Anthony A. Williams, and his statement was full of righteous indignation. “Should this issue not be resolved immediately,” it read, “I am prepared to introduce emergency legislation to address this matter.” No such legislation ever materialized.

A year later, Fairman broadened the campaign. This time, he got three councilmembers (Chavous, Sandy Allen, and David Catania) to attend a rally in the D.C. General auditorium and demand that Williams fire me for supposedly shortchanging the PBC. Williams, however, was not buying it. Indeed, he seemed amused that so many people wanted my scalp. In a speech to a large crowd at La Clinica del Pueblo, he described me as the “Velcro Medicaid director”—unlike Ronald Reagan, the Teflon president, everything stuck to me.

Fortunately, in all my years with District government, no mayor or control board official ever instructed me to bend the Medicaid rules. Even Mayor Marion S. Barry, who in all other respects sided with Fairman and D.C. General, never took this step. And it’s a good thing, too: Federal auditors keep a close watch on federal Medicaid funds, and any violations of the rules would have resulted in disallowances and penalties.

Fairman’s efforts ultimately paid off, however. In 1998, the District’s chief financial officer brokered a deal under which Fairman agreed to give up his Medicaid claim and the District agreed to write off $55 million in D.C. General debts from previous years. The whole campaign against me was simply part of a big game to squeeze additional funds out of the government.

Even though D.C. General was forced to borrow $58 million from the city treasurer over the preceding two-and-a-half years to pay its bills—money that the hospital cannot possibly repay—Fairman told a mayoral health-care commission on Jan. 6: “We’re in the black.”

No one really knows the full extent of the PBC’s indebtedness because its financial records are in such disarray. District Health Director Ivan C.A. Walks has said he has no confidence in D.C. General’s own numbers; according to Mark Legnini, a consultant working for the mayoral commission, the records are so flawed that “D.C. General Hospital is flying blind.”

Fairman acknowledged the difficulties but dismissed them as “start-up problems” even though he had been in charge of the hospital for five years. But if the records are in such disarray, how could he be sure that the PBC was in the black?

To be sure, Fairman inherited an old, inefficient hospital that was rapidly losing business and needed millions of dollars in physical plant renovation. (The U.S. Public Health Service put the number at $120 million.) But the efficient thing to do would have been to take some of the money that the District was spending on the uninsured and purchase care from private hospitals, most of which were half-empty and badly needed the business. They could have provided these services for about half the amount going to the PBC. D.C. General could have been converted into an outpatient clinic serving the neighboring wards, and the inpatient savings could have been invested in high-quality primary-care services.

Fairman opted instead to ignore the economic trends, downplay the hospital’s worsening situation, and hope that some miraculous intervention would turn things around.

In 1998, for instance, Medicaid was running a surplus as a result of cost-containment initiatives we had implemented. There was a consensus among city officials that we should expand health insurance to all children living below 200 percent of the federal poverty level, but my agency recommended that we go further and cover the parents as well. Some 7,000 low-income adults would have obtained health insurance if we had done so, and people on welfare would have been able to take jobs without fear of losing their health coverage.

Fairman, however, regarded the Medicaid surplus as just another opportunity to increase funding for D.C. General. So he persuaded Allen to oppose the coverage for adults unless we agreed to funnel a disproportionate share of the new enrollees to his hospital. In effect, Fairman and Allen were prepared to hold these uninsured people hostage to their plan to benefit D.C. General. Eventually, the control board got tired of all the bickering and approved the coverage of adults over Allen’s objections.

Even though this expansion helped more people in her ward than anywhere else in the city, Allen never forgave me for opposing her, and during the 1999 budget deliberations, she retaliated by cutting $32 million from the Medicaid budget. She made no attempt to justify the cut—there was no analysis showing that Medicaid was overfunded—but she was determined to show the world who was boss. The only problem was that Medicaid is an entitlement—which means that no eligible person can be denied services. After much wrangling, Williams and control board Chair Alice Rivlin were able to restore some of the money, but we still ended up short of what we needed. Medicaid is now running a deficit as a result.

By this time, Doneg McDonough (a mayoral staff member) and I had developed a new plan, building on the earlier expansion, to extend health-insurance coverage to virtually all of the 80,000 District residents who still did not have it. Our proposal would have reduced the subsidies going to hospitals (including D.C. General) and increased funding for primary and preventive care. When we presented it to Williams, he was enthusiastic and agreed to include it in his next budget proposal. If enacted, the plan would have effectively brought universal health-care coverage to the District of Columbia.

But Fairman would have no part of the idea. Once people got health-insurance cards, allowing them to obtain services at the hospital or clinic of their choice, it was apparent that a large majority would choose some place other than D.C. General. The loss of business would accelerate, and it would become harder to justify the $32 million subsidy that the District sends D.C. General each year.

The debate over the plan took on distinct racial overtones. “Who’s going to take care of our folks?” Chavous asked the heavily African-American crowd of health-care workers at a D.C. General rally to oppose the mayor’s plan. Promoting public health was far from his mind.

In the end, Williams’ plan was rejected. The uninsured don’t have much political clout in city hall, and they were no match for the private hospital lobbyists—or the bankers, lawyers, and real estate people who sit on hospital boards. In addition, the whole D.C. General support network was mobilized against the initiative.

Perhaps now, with Fairman apparently on the way out, a rational discussion about D.C. General can finally begin. CP

Art accompanying story in the printed newspaper is not available in this archive: Photographs by Darrow Montgomery.